US stocks fluctuate amid earnings as ECB sends bonds lower

Bloomberg

Earnings continued to set the tone on global equity markets, as equities from Europe to the U.S. fluctuated with investors looking for evidence that economic growth is bolstering profits. Government bonds retreated after the European Central Bank signaled stimulus expansion was on hold.
The S&P 500 Index swung between gains and losses after closing at its sixth record in eight days. Intel Corp. dragged the Dow Jones Industrial Average lower for the first time in 10 days, while EBay Inc. paced gains on the broader index. Airline results sent European shares down from a four-week high. The 10-year Treasury yield rose to the highest in a almost a month. The ECB’s decision sent the euro lower before the shared currency climbed back to even versus the dollar.
Almost $5 trillion has been added to the value of global equities since June 27 amid signs central banks including the BOJ will boost stimulus to shore up economies after the U.K. voted to leave the European Union. Earnings have also played a part, with positive surprises helping lift the S&P 500 to a record.

Stocks
The S&P 500 fell less than 0.1 percent to 2,172.15 at 10:03 a.m. in New York. The Dow slipped 0.2 percent, threatening to halt the longest rally since 2013.
GM gained 3.2 percent after posting record second-quarter earnings of $2.9 billion. Intel lost 4.4 percent after reporting slower growth in its server-chip division, while Qualcomm Inc. gained as its results showed the chipmaker is overcoming hurdles in China. Joy Global Inc. rallied 20 percent after Japan’s Komatsu Ltd., the world’s second-biggest mining and construction equipment maker, agreed to buy it.
The Stoxx 600 fell 0.2 percent, with the volume of shares changing hands about 9 percent less than the 30-day average. Lufthansa tumbled 7 percent, and EasyJet Plc slid 6.3 percent after posting a drop in quarterly revenue. Hermes International SCA gained 3.4 percent as the luxury clothing and handbag maker said its profitability improved. Miners in the Stoxx 600 advanced for the first time in three days.
The Borsa Istanbul 100 Index slumped 3.6 percent. Turkey imposed a three-month state of emergency as the government pursues those responsible for last week’s failed military coup, detaining thousands of army officers, judges and prosecutors. A wider purge is under way that encompasses universities, schools and the civil service. The country won’t be under military rule, with army units taking orders from provincial governors, President Recep Tayyip Erdogan said in Ankara on Wednesday.

Currencies
The euro was little changed at 1.1008. Draghi indicated the ECB will consider adding fresh stimulus later this year when it has a clearer picture of the economic impact from the U.K.’s secession vote. “Over coming months, when we have more information including staff projections, we will be in a better position to assess the underlying macroeconomic conditions,” Draghi said.
The yen pared gains after an interview in which Bank of Japan Governor Haruhiko Kuroda dismissed the idea of so-called helicopter money was revealed as having been conducted in June. The yen advanced 0.4 percent to 106.44 per dollar.
“The market had to unwind part of that initial reaction,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark. “If it was something that he said very recently, it would be maybe a sign that he disapproves of the latest market action. Whereas if it’s a couple of weeks’ old, it’s not a direct communication aimed at what the market is doing.”
The Bloomberg Dollar Spot Index was little changed, after four days of gains. A Citigroup gauge that tracks the degree to which American economic data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve interest-rate increase this year at 47 percent, up from 9 percent at the end of June.
Data Thursday showed sales of previously owned homes in the U.S. unexpectedly climbed in June to the highest level in more than nine years, giving a boost to residential real estate as it approached the end of its busy selling season.

Commodities
Oil for September delivery fell 0.3 percent $45.60 a barrel in New York and Brent crude slid 0.4 percent to $46.97 in London.
Nickel in London extended gains, touching a nine-month high at $10,730 a metric ton on the London Metal Exchange, as the Philippines cracks down on more mines, disrupting supplies. China, the top consumer, more than doubled foreign purchases of the refined metal to a record in the first half.
Gold advanced 0.3 percent to $1,319.60 an ounce after closing at a three-week low. The metal has alternated between gains and losses for eight straight days.

Bonds
Germany’s 10-year bond was little changed, with the yield at minus 0.005 percent.The yield on similar-maturity U.S. Treasuries was 1.58 percent. It sank to a record 1.32 percent on July 6 and analysts see it ending the year at 1.74 percent, a Bloomberg survey shows.
The cost of insuring investment-grade corporate debt against default dropped to the lowest since March 11. The Markit iTraxx Europe Index of credit-default swaps declined one basis point to 68 basis points. A gauge of swaps on junk-rated companies fell five basis points to 318 basis points, near a six-week low.